Far removed from Reality

The World Economic Forum (WEF) concluded yesterday at the Swiss Alpine resort of Davos.

This time around it was a low-key affair since several powerful countries and leaders did not attend. For instance, President Trump and Prime Minister May did not come due to serious problems that they are currently faced with in the U.S. and the U.K. respectively.

However, many billionaires and world leaders did attend, as participation at the Davos WEF has become an annual pilgrimage for movers and shakers from around the world. The WEF conducts forums in other major countries, but none beats the depth and comprehensiveness of the Davos forum.

There were many key issues affecting humanity that were discussed at this year’s event, such as the alarming negative impact of Climate Change. This is nothing unusual. The point is that most attendees come from elite or political or business backgrounds and are, in general, rich. It would be interesting to measure and report the average net worth of all the invited participants at Davos forum. That should prove that this crowd is far removed from the daily mundane reality of an average (not even a poor) citizen’s life, anywhere in the world.

How can a rather small collection of rich and powerful folks make a critical analysis of problems facing this planet and humanity? How can they “feel” the problems, pains, challenges and issues that a common man or woman needs to tackle in his or her life? Are these people really addressing the “real” issues and coming up with practical solutions to world’s rather intractable problems? Or, are they just networking socially and having fun, either at corporate or government expense? Let us not forget that these elite folks already know each other (mostly and generally) from previous interactions. One obvious objective is to learn from each other – what are the current views of the “elite” and “learned” folks from around the world, have lunches / dinners / cocktails and learn more of each others’ perspectives, etc., There are, of course, multiple panel discussions from which our elite participants will learn even more.

But, what is the concrete action plan to better the life of the average citizen coming out of this most expensive jamboree at an exclusive Swiss resort? Is there something coming out of this event that will affect the life of the common man, is there something that he can even understand?

Such events, are in general, a waste of money, which could be deployed in social projects and alleviate poverty. But that is not the concern of the rich folks who schmooze over caviar and wine. This is the obvious disconnect which exists between such powerful gatherings and life’s realities.

I studied the agenda and the events of WEF held last week. There were many useful and relevant topics covered in the agenda, no doubt. There was significant coverage of environment, climate change and the impact of technology – Artificial Intelligence, Machine Learning, etc., – these are all very relevant, I should say.

The key question, however, is how will WEF deliberations change the world for the better from a socio-economic point of view. What is the success rate of WEF influencing socio-economic policies of governments around the world which choose to attend the WEF event and actively engage other attendees. My theory is that economics at a theoretical level is of no practical use, unless the main users of economic principles (viz., governments) apply the same in consultation with WEF (not the IMF or the World Bank both of which apply tortuous conditions on countries seeking their financial support). How can some of the useful deliberations at the WEF be successfully applied in large countries such as India, China or Indonesia? What are the resources available to the governments which want to reform their economies? What technologies can be leveraged? What are the practical methods that we can adopt for sustaining the deteriorating environment? And so on, and so forth.

May be these things are already being executed. However, in my research on WEF’s practical applications, I could not find clear cut evidence. I could not put my finger on the specific outcomes which are being followed up by WEF around the world.

If my audience can clarify, I will be happy to post an update to this post. If WEF disagrees with what I have stated, all that is required is a response to this blog post, and I will post the same as a correction to what I have written.

In a nutshell, I would like WEF to understand two things –

1. The utility value of the annual WEF meeting is not grasped by the proletariat, and I have seen no evidence that WEF is making an attempt to communicate as such;

and,

2. The obvious disconnect between the abject reality of peoples’ lives and the economic deliberations at WEF conducted at the apex levels of governments and corporates surely exists, whether acknowledged by WEF or not.

Socialism is emerging even in that most Capitalistic country in the world – I mean the U.S. and its potential ramifications over the next few years have not been understood by the key economic players – whether in governments or corporates. This is also something that WEF needs to address. How about inviting Bernie Sanders and Alexandria Ocasio-Cortez to the WEF 2020 as key note speakers?

Cheers, have a good weekend folks,

Vijay Srinivasan

26th January 2018

The Make-Believe Yet Real

I have been wanting to write on this topic for quite a while.

I struggled with the title a bit, as I thought it should reflect what I really feel about the specific matter about which I am going to write in this post. How do I communicate about something in a succinct yet penetrating manner? I realized that I have to go a long way in mastering the English language! It has been tough though I might sound simplistic!!

This post is about the City-State of Singapore.

It is sometimes too hard to believe that this bustling city of 5.6M people produces a GDP of USD 330B, translating to USD 57K GDP per capita, placing it as the third richest country in the world. It is managed like a global corporation with efficient allocation of capital and resources, with long-term planning firmly in place, assuring its citizens and residents of long-term economic and political stability. It is hard to grow at more than 3% GDP growth rate for such a highly developed country with physical limitations on geographical size and population (which is not growing).

My point in writing this post is to compare how Singapore manages peace and prosperity in a cogent and planned manner, as compared to cities like Paris or New York or London. I cannot compare it with large countries as Singapore is just a city. When I look at the extensive TV coverage on the yellow-vest protest in Paris, or the multiple people protests in New York that went on last week, it is apparent that the respective governments are not doing a fine job of addressing the issues or grievances of the people who are protesting. Probably they couldn’t care less. There is law and order problem in almost every major city around the world – as we know, there are downtowns and also the seedier parts of town with criminal gangs operating in many cities. There is violence perpetrated every day – you just need to look at the gun-related crimes in the U.S. or even in just one major city in the U.S. to understand how far violence has embedded itself into the psyche of the American society.

I am not trying to say that people cannot protest to convey their views. This is possible in Singapore in a government regulated place which is designated for that purpose. Disrupting the city’s business and economy should not be the way. In cities in India, people protests are often infested with political parties’ radical elements who have their own agenda and also criminals who get a free ride to perpetrate violence in the guise of being part of such “people protests”. There is no way to control such situations. The images of public transport buses burning, public property damaged, private cars destroyed, civil services disrupted, and so on and so forth, have poured in even from such a civilized and cultured country such as France. The massive outpouring of people against the government is a big indication of disconnect between those who govern and those who are governed.

Violent protests causing damage and death have no place in civil society. The best way to bring down an elected government is to precipitate a massive defeat in the next elections – not to dethrone it via the undemocratic method of public violence. Such a thing has happened in many countries – such as Ukraine in 2014 when a popularly elected government was overthrown with the support of Western governments and people protests. [Note: I am not a supporter of Russia – I am mentioning this fact just as an example].

Of course, there are governments which suppress people protests with a heavy hand, causing further damage. They incarcerate people who did nothing but participate in protests for a long time without due process. There are many examples of such happenings around the world.

Governments which do not listen to their electorate will eventually face defeat in the subsequent elections. So, people have to be patient to exercise their franchise in the next elections. While peaceful protests are fine, how will any government ensure peace when they are dealing with some 10,000 or more people at one go in one place in a city? Law enforcement is likely to make errors in judgement.

Coming back to Singapore, the peace and prosperity remain the key tenets of the government and of the people. There is absolute sync between the government and its citizens on certain fundamental principles and frameworks. Citizens may not always agree with the government, and there are plenty of examples of such situations. I would mention the issues of overcrowding of subway system and immigration – there are many more. The government, however, heard the issues, analyzed the causes and addressed the same. It is absolutely critical that countries have “listening” governments.

The government – citizen compact has to be heavily communicated and understood. I agree that bigger countries such as the U.S., China, India and the U.K. have larger issues and more people problems to be tackled. Singapore may not have those kinds of problems and issues. The key difference is the measured approach, cautious thinking, consultations with key affected parties, and communication. As we can witness the current ongoing stalemate in the U.S. government shutdown, hard positions between key branches of government are untenable and unsustainable, because the affected people will eventually hit back. Maturity is needed, and if the elected President and House Speaker cannot even sit down and sort out the issues bedeviling the country, then the hope for a positive resolution drops considerably in the minds of the citizens. In the meanwhile, running of the government suffers, and 800,000 government servants are going without paycheck. Not at all acceptable in a civil society and in a democracy.

I can also cite the example of the U.K. where a “no-deal” Brexit is staring at peoples’ faces with its attendant uncertainty and impending economic chaos. If it were Singapore’s problem, it would have been tackled differently, in a more mature way. There is not much rationale in countering that Singapore would not have such an issue as Brexit. If an “Asian Union” were formed in the same manner as the European Union, then Singapore would be a part of it, and such a situation as Brexit is entirely feasible. A referendum is not a solution, in my opinion. Citizens are good in electing popular governments, but collective policy making cannot be sub-contracted to the whims and fancies of sections of society who could sway the vote which could affect the entire country and its people. This is a debatable argument, and I am not strong in propounding this – I have to work on strengthening the logic and rationale of such an argument. An elected government has been given the task of running the country in the best possible manner, and it has to execute its job keeping the best interests of its citizens, yet be ready to compromise where needed. There is nothing like “my way, or highway”. If that were the case, Malaysia and Singapore would not have enjoyed peaceful co-existence over the past five decades.

Well, I can keep going on. In a nutshell, the large countries of the world need enlightened governments with a broad perspective on public issues and long-term thinking. I know it is easier said than done, as large countries have fractious and finicky electorates and fragmented political parties. But then, we want the best amongst ourselves to govern us, right? It means that successful people in their own fields of endeavour have to be persuaded to participate in the political process and be part of the government execution even if they do not win elections.

Singapore continues to be one of the best managed countries in the world, even without the economic statistics to support it. If that is not the case, how do we explain the fact that foreigners who come here do not really wish to leave a city which has almost zero crime, decent economic opportunities based on merit, good public transport, almost all government services available on a digital mode to its citizens, a good healthcare system (although expensive), etc., though I have to state that the real estate is extremely expensive. It is a long track record which is hard to beat amongst the developed countries of the world.

Yes, it appears to be “make-believe” when you live here, yet it is absolutely real.

Have a great week ahead folks,

Cheers,

Vijay Srinivasan

20th January 2019

The Necessity of Socialistic Capitalism

Capitalism has long been established as the most efficient way of generating wealth by effectively leveraging a variety of inputs such as capital, labour and other resources in producing something of value for mankind’s consumption. This is my understanding of the success of Capitalism as an economic practicality which has long superceded other forms of economic theories. Countries which have tried pure Socialism or pure Communal Economics (such as Communism) have long since failed in generating wealth for the countries and its people who pursued such economic philosophies.

Note: I am not an economist and my MBA has generally been useless in producing new thoughts in me – whatever I have conceptualized has been based mostly on simple common sense and some maths, and I have been more interested in a variety of topics, the articulation of which needs some level of mastery of the English language, which is where I am still focused on. If you find wrong economic principles, please send me a comment or email and I will make a correction after validating your point.

However, it is an acknowledged fact that Capitalism has had many flaws which have resulted in skewed distribution of wealth. In fact, wealth in a Capitalistic society such as the U.S. is largely concentrated in a fraction of its people – the GDP per Capita or per Capita Income is a wrong measure as it averages the inefficient distribution of wealth. It is a fact that social equity has not been achieved in any Capitalistic society, and it is not unusual to see large numbers of homeless people even in generally wealthy cities such as New York and San Francisco. There is nothing inherently wrong or immoral in the Capitalistic ways of economics. Combined with the manner in which the fundamental building blocks of society is constructed, Capitalism aids in making the rich folks richer as they get access to more business opportunities and more doors open for them than for the middle class or the poorer sections of society. Further, people who have been fortunate in securing high levels of education, obtain a disproportionate advantage over others in aiming for and securing significantly higher income and wealth. Social networks are skewed in favour of alumni networks or economic networks, so it is easy for the graduate of an elite institution in the U.S. to secure admittance to an elite club of alumni who are already in powerful positions in large corporations or banks, or founders of startups which go on to create wealth.

Where does that leave an average person in a Capitalistic Economy?

Where does that leave a relatively poorer person in such an economy?It is a known fact that Capitalism generates wealth and it also ensures that folks who are left behind are in no position to compete well in an equitable manner. I would like to be challenged here. I am one of those from an elite Indian management school who did not have the advantage of economic advancement before my time in that school, but secured a significant leeway once I passed out of that school. My classmates and I had a disproportionate advantage over others not from elite institutions of repute who received multiple placement offers from global companies.

Coming to think of it, while it is not something which went through my mind while doing my MBA, the fact that ivy league students possess undue advantages over even others who are from lesser reputed schools is well established, and this advantage then percolates up into the economic ladder of the society. I have seen many examples of such progression.

How do we bring social equity into a Capitalistic society? Bernie Sanders, the U.S. Democratic politician and a potential Presidential Candidate, is a proponent of social equity. His popularity even amongst teenagers was tremendous, as young people are waking up to the reality of social disparities which had made the U.S. rank low in economic equity (I am not getting into Gini Coefficient!).

In my mind, I think the only way to get there is to follow the “reservation” system – provide unequal access to education for the economically disadvantaged folks. Eliminate access to people who will automatically get access because they are big donors to educational institutions. Average and poor people need to get access to higher education to upgrade themselves – they might need lots of economic and social support and that has to be provided by the government. This is not a “subsidy” – this is “equal access which will now be termed as unequal access”. Once the proper set of conducive factors are in place, then the disadvantaged students will be able to compete with students who have had an “unequal” access in the past because they came either from wealthy families or were able to invest in better preparing for higher education via tuition, etc., which the poor people cannot afford.

Once education is handled properly, then the economy will reset itself with a broader perspective instead of largely being driven by economic greed alone; by principles which suitably combine Capitalism with Socialistic philosophy which should benefit the society at large in an equitable manner. Unless we tackle education in a fundamental way, society and economic philosophy cannot be reformed, and things will continue as before with no reforms and no changes which will benefit all.

It might feel strange that I am advocating “reservation” (the topic of reservation is a very sensitive one in India and is also practiced in other countries such as Malaysia – India has just passed the first reservation bill for the economically poorer section of the society without looking at their caste or religion, though the previous reservations based on social backwardness still exist on the statute), but it is worth considering given the economic neglect perpetuated by the Capitalistic ways of economic wealth building. Think about it deeply, and you will discover that it makes sense not just in a developing country such as India, but even in developed economies grappling with social and economic inequities.

Well, I think this is a rather heavy topic for weekend ruminations!

Enjoy the rest of the weekend,

Cheers,

Vijay Srinivasan

12th January 2019

Singapore

The India Puzzle

April 2019 is fast approaching……..

India will complete 5 years of BJP Government rule in the next 3 months, under the stewardship of Prime Minister Narendra Modi.

While the jury is still out on whether the BJP Government delivered on its promises to the electorate (made in 2014), one thing is absolutely crystal clear: the image of India as a nation state has completely transformed in the eyes of the world.

I may or may not agree with policy decisions or actions/inactions of the Government. Every government has its own party driving its policies and actions. Every government has its own compulsions as well as prerogotives. Every government tries to do its best, yet falters occasionally. It could be because of ideological differences or internal squabbles. It happens in every government and every political party.

I am not here to condone any negative fallouts, of course. I believe that Mr Modi could have done better by not keeping his silence during occurrence of violent riots against minority communities. He is the PM for all citizens of India, not just for the Hindus. I agree that Mr Modi is a dynamic, energetic, passionate and committed leader, but in order to be a true world statesman, he needs to step beyond his own party shoes and demonstrate that he is a farsighted and noble leader of all Indian citizens. Some of his principles, such as digital banking for the unbanked millions, are truly world-class. In many ways, he is transforming India.

However, taking a nation as diverse as India on a journey of transformation, requires phenomenal drive towards inclusivity. Of course, we all agree that the Congress Party’s philosophy of dividing India based on minority vote banks is not ethical and is no longer tenable. Minority votes should never be leveraged to short change the majority’s interests.

This does not, however, mean that BJP can just pull along India simply based on their allegiance towards the majority Hindus. As I mentioned before, India is the most diverse nation on earth, and that diversity also comes from its majority – the Hindus are a diverse lot and they cannot be taken for granted. For example, I have my own liberal mindset, and cannot be compelled to follow a single Hindu philosophy or a guru who will guide me to enlightenment. I think for myself, and I believe that is not only my own strength and contribution to the overall society, it is also the way most educated Hindus think.

What does this mean?

It only means one thing: no political party can take the Hindu vote bank for granted. There is no such thing as a “Hindu vote bank”, which will only vote for the BJP, because it is a Hindu party.

Time and again, the Indian electorate, whether rural or urban, has proved that it cannot be taken for granted, and it has a mind of its own, in the true sense of democracy. And, let us not forget, India remains as the single largest functioning democracy in the world, and that is not going to be challenged anytime soon. It will make its own collective choices again in April 2019.

The key is the messaging. I think the Congress Party, much in disarray over the past 4 years, has finally found its mojo, and is gearing up to give a run for the money to the ruling BJP. It is happening and it is going to be a challenging race. BJP can no longer assume that it is simply going to get an absolute majority like it did in a major upset in 2014.

Coming back to the external global image of India, yes, that has been a major accomplishment of the Modi Government. No doubt about it. But, the domestic electorate does not care about that achievement. They are rather upset about the demonetization (which did not produce the expected result of unearthing the much ballyhooed black money), and the imposition of high GST tax rates on consumption. In many ways, the Indian electorate operates on local or national issues, and not on international issues. It is no different from what any other electorate, including the U.S. electorate, does.

So, what is the conclusion?

Where is India headed in its next phase of growth?

Is India going to replace its colonial aggressor as the world’s Fifth largest economy by end of 2019?

What is the right thing to do by the Indian electorate in the 2019 polls?

What is my own suggestion?

Nothing. Nothing at all.

India is an evolving, maturing country, economy and society. I believe it will continue to find its feet, irrespective of the options in front of it. It is an intelligent society. No policy prescription on international or national security matters is going to affect the mind of the electorate.

Think about it. On the other hand, the world itself has a stake in the outcome of the Indian elections, at least based on the fact that the global democracy as a form of government is now predicated on its success in India. India has now become a torch bearer of democracy, and the whole world is watching if it will also keep its 7 decades old commitment to secularism. Either BJP modifies its messaging, or the Congress does it as it has always done. BJP has more of a responsibility to consolidating its successes and steering the country in the right direction.

All the Best to Democracy!

Cheers,

Vijay Srinivasan

5th January 2018

The Inherent Corruptibility of the Great Human Mind

It took me quite a while to think and frame the title of this blog post, though I know well what I am going to write about. I added the word “great” after more thought, as I concluded that notwithstanding the negative aspects of the mind, it is still the greatest invention of man (till Artificial Intelligence unseats it from the throne).

The idea for this post came from the introduction chapter of the book “We are the Change we seek – The Speeches of Barack Obama” edited by E.J. Dionne Jr., and Joy-Ann Reid. My wife passed this book to me for weekend reading, asking me not to waste time and instead read something substantive and meaningful (Disclosure: She likes Barack and Michelle, but I am ambivalent on Obama and fond of Michelle). There must be some pointed intention in her to make me read the works of this famous orator of a president.

I did read the introduction fully, and then meandered around the book, read Barack Obama’s farewell speech at Chicago, and so on. But one thing in the introduction chapter held on to me like a leach – it was the quote from a speech delivered by FDR (Franklin Roosevelt) at Thomas Jefferson’s home at the historic Monticello venue on July 4, 1936.

To quote FDR, “……….our nation’s founders had broken away from a system of peasantry, away from indentured servitude. They could build for themselves a new economic independence. Theirs were not the gods of things as they were, but the gods of things as they ought to be. And so, as Monticello itself so well proves, they used new means and new models to build new structures”. Unquote – the purpose of the past is to serve the present and future. History is about testing institutions against standards and adapting them, as FDR puts it, to “enlarge the freedom of the human mind and to destroy the bondage imposed on it by ignorance, poverty, and political and religious intolerance”.

I rarely quote from books or articles or newspapers. Most of what I write germinates from a single idea, a single inspiration. I then think about the idea and bring together the thoughts from a racing mind, in order to make a meaningful blog post.

However, in this case, I felt that I am rather highly influenced by the idea of FDR, and so wanted to give full credit to him, before I leverage his idea for my add-ons!

To dissect FDR’s idea, you need courage, yes, I mean courage and boldness of vision. Mahatma Gandhi had that courage, to break away from traditions, and release the collective power of the minds of millions of Indians. I may not agree with his collaboration with the British during the Second World War, but that does not take away an inch from the greatness of his mind, which was as astute and visionary as the founders who wrote the Constitution of the United States.

We are held back from progress when our minds are not completely free from the bondage that FDR is referring to in his Monticello speech. When we discriminate people by their race, religion, or colour, it means only one thing – that we have not yet forgotten slavery and the hard lessons of ethnic cleansing. This discrimination exists everywhere, in all societies, and more so in that beacon of human freedom, the United States.

The human mind is highly influencable and highly corruptible. I would argue that the human mind distances itself from morality when it is forced to encounter difficult choices in society. It is rather easy to follow countless others and take the beaten path – why take the risk and chart a new path like what Gandhi did? And, face unknown troubles? It requires big courage, self-sacrifice and a certain moral steeliness.

The societal demand for conformism is a drag on the independence of human thought and freedom of the mind. Society corrupts each and every member who has chosen to be part of that society. If the cult leader (taking an extreme example of conformism) orders his disciple or follower to commit a crime, it is more than likely that the crime will be executed just so that membership benefits continue and there are no repercussions from the cult. You see what I am suggesting? Society controls the freedom of the human mind.

Gandhi protested against the religious traditions of the early 20th Century, and went against established traditions followed by Hinduism. He was a rebel and a reformer, who wanted to transform the Indian society and unlock its long held shackles. He wanted independence from the British rule, no doubt, but first he wanted Indians to achieve independence of their minds.

Human mind, as I stated above, is corruptible, as it is not immoral to amass wealth in whatever way possible. If the mind takes that view, then any logical argument to wean it from its corruptible state would be pointless.

So, in a nutshell, the human mind is corruptible, highly influencable in a negative way, and is not reform oriented due to the necessity to confirm to society’s conventions. Reformers come along once in a while, and try to persuade the people on the critical importance of positive reforms in an egalitarian manner. Mostly they fail, as Obama did, but sometimes they succeed as Gandhi did.

So what do you think?

Is your mind already corrupted? Are you forced to conform to societal norms and demands?

Or, are you a reformer? Do you feel that the society is unfair and unjust? Do you think marginal folks do not get a chance to play a meaningful and impactful role in society? How do you knock off corruption from society?

What should we do together?

There is always time to think, and no time is more suited for thinking than a Sunday evening with a nice drink in the hand and thoughts in that corruptible great mind of yours.

Cheers,

Vijay Srinivasan

02 December 2018

A Reckless Mind-Altering President

Democracy is a demon.

How else can we describe the current sorry state of affairs in the U.S., which in turn is causing consternation all around the world?

At the outset, it is difficult to challenge the “simpleton” logic employed by Donald Trump.

• Is it wrong to make an attempt to control illegal immigration?
• Is it wrong to separate young children from their parents who are illegal immigrants?
• Is it wrong to challenge China for its trade policies which have caused a huge lopsided trade deficit with the U.S.?
• Is it wrong to arm twist the European Union on defence spending for their own protection?
• Is it wrong to select a conservative Supreme Court Justice who shares common opinions with the President?
• Is it wrong to impose customs tariffs on imported goods which affect American industries and cause unemployment?
• Is it wrong to attempt to control legal immigration and disallow spouses of temporary legal corporate employees from working?
• Is it right for American manufacturers to shift production to low-cost countries like what Harley Davidson has done?
• Is it wrong to attack the “fake” media when it has been proven that there are instances when the real media reported fake news?
• Is it wrong to attack long-standing American allies on trade, immigration and defence spending?
• Is it right to exit from the U.N. Human Rights Council?
• Is it right to throw away an international agreement with Iran which was signed by the previous Presidential administration?
• Is it right to schmooze with President Putin of Russia when there is significant evidence that Russia had interfered with American Presidential Elections in 2016?
• And so on, and so forth………..

Prima facie, it appears that the President is doing all the things that he committed to do while campaigning for the President job, and it also appears that he is right to carry out his commitments to the American people who elected him President, right?

Right. That’s for him.

Right. That’s for the vocal electorate in Middle America who voted for him.

Right. That’s for the coterie of his cabinet members who are not allowed to have their own unique opinion which could be different from those of the President.

Wrong. That’s for the rest of us.

But does he care? Absolutely not.

President Trump is convinced that he is doing the “right” thing for America and the American people. It is his unshakeable belief.

What he does not understand, or does not wish to understand, is that the U.S. is currently the #1 Nation impacting global policies in all facets of human life. Almost. When the U.S. is in such a unique and vaunted position, it is absolutely necessary for it to take the global impact into consideration, notwithstanding the fact that it could sometimes appear to be a philanthropic action, or cause temporary negative impact on the U.S. itself. Unfortunately, no other nation has been able to rise to the level of the U.S. over the past 70 odd years or so. American Presidents cannot be reckless and clueless about rules governing international law, trade, immigration, security, and diplomacy.

While what President Trump does to his people is his own business, Americans are now sufficiently global in their thinking that they should see through if their leader is violating global compacts and policies. Fortunately for President Trump, the U.S. economy has been doing well, and unemployment rate is falling. But, this is a time-sensitive phenomenon, and it only takes a couple of months before things start to unravel, as his trade policies are sure to cause trouble.

Global diplomacy is not about just getting to know each other, shaking hands and indulging in small talk. There is a huge amount of work which goes in, preparing for a global summit meeting. President Trump is now realizing that fact with reference to North Korea.

President Trump indulges in propagating fake news himself at his election rallies. There is only one single truth on every matter, and factual inaccuracies are mounting in his talk at his rallies where wild crowds of supporters cheer him on. He goes back to the White House with increased drive to continue his policies. His twitter feed has become a series of utterances against his “enemies”.

Overall, here is a President who self-indulges himself, berates constantly against his opponents, derides the Special Counsel investigation on Russian interference in U.S. elections, stumbles on conflicts of interests, communicates his racist tendencies, and his bad views on women in general. When a global leader of stature meets President Trump, what do you think will be going on in the mind of that global leader?

It is not hard to guess.

So, President Trump needs to get back to the basics of governance which are probably taught in a U.S. university of repute such as Georgetown in Washington DC itself, or consult past Presidents who could provide him some serious counselling. He needs to kick out sycophants from his Cabinet. He needs to listen to some seasoned leaders such as Angela Merkel of Germany. He needs to understand that running the U.S. government and managing global affairs is totally unlike running a corporation. And, he needs to kill his twitter handle. His digital skills have ruined policy making.

In a nutshell, President Trump can recover from his governance lows by actively seeking counselling assistance. All of us need counselling or mentoring at some stage in our lives, and it is nothing to smirk or laugh about. So, here we are – President Trump will hopefully read this blog post of mine and adopt my sage advice rendered to him without any prejudice by a global citizen who thinks globally.

Have a great week ahead,

Cheers,

Vijay Srinivasan

8th July 2018

 

The Mechanism

Institutionalized corruption has been the bane of good governance in most developing countries. Even in developed countries corruption masquerades as expensive lobbying, with quid pro quo for almost all favours done by the powers that be. Unfortunately, corruption is instinctively embedded in human psyche – the premise is that almost everyone has a price, like everything has a price, and provided that price is paid, that everyone is available to provide a service. It sounds obnoxious and bothersome to say the least, but it is a practical reality most of us have encountered in our lives. There is no denying it, it is very rare for a person not to have experienced or seen it.

When corruption is institutionalized in the system, like it is feeding upon itself in embedded circles, then we have a very serious and dangerous problem to handle and fix. When public money (basically taxpayers’ money) is siphoned off by government-owned companies through the well-oiled system of awarding contracts at inflated prices to chosen contractors, who then reward the politicians and ministers who appoint directors on the board of these companies via a money laundering scheme, then corruption is well entrenched. It is not possible to eradicate the scourge of corruption irrespective of change in governments or officials. The law enforcement becomes part of the system as it comes under the Justice Ministry, which is just another government machinery to ensure that the above-described system stays in place.

“The Mechanism” is a Netflix serial which just started running – it is about the systemic corruption in Brazil, which is still playing out in real life. You might have seen that the ex-President Lula da Silva has been arrested and sentenced to years in jail, and his successor Dilma Rousseff is also facing corruption charges. I have been seeing the serial for the past couple of weeks, and it has got my full attention. I can visualize how the same system would work out in other countries that I know of.

What surprised me in the serial is the passionate commitment of the law enforcement officers and their loyalty to each other as they fight the corrupt villains together sometimes, and on a disjointed basis on other times. It is funny to see how the lead officer fights off the prosecutor during a press conference. At the end of the day, it is all about human emotion, and how that plays out while the almost real story spins out of control. The Mechanism also shows how important it is to have an impartial judge who carefully evaluates the evidence before signing off the search and seizure or arrest warrants. When someone cannot be bought, then the story turns in favour of ultimate justice.

Many of us have experienced the most simple variety of corruption – like the official at the property registration office demanding a cut before registering the sale or purchase of property, or the driving license official asking for a price, etc., Many of us have only “read” about institutional corruption – how public funds that otherwise could be usefully deployed to pay for much needed infrastructure or citizen services, are tapped by unscrupulous public companies and politicians which keep developing nations poor for ever. This is a sad story playing out in most countries. There are only a very few lucky countries which do not have this plague afflicting their system of governance.

I was never that much interested in Brazil, but The Mechanism brought Brazil right front and centre – a fascinating country indeed. It is the 8th largest economy in the world with more than 207M population, and a GDP per capita of over USD 10K. It is the largest economy in South America and prior to 2012, it was one of the fastest growing economies in the world, meriting its inclusion in the McKinsey BRIC group of countries.

Large countries do have large problems, and Brazil has not been an exception.

Corruption has roiled the country out of shape over the past several years, damaging the presidencies of multiple presidents. It is always surprising to find that the pressure to maintain the status quo is just phenomenal – as we see in The Mechanism, the previous Attorney General (called the “wizard” in the serial) tries to negotiate a deal with the incumbent Attorney General on behalf of the 13 corrupt contractors who, he maintains, are crucial for the survival of the Brazilian economy! And, when that pressure builds up all the way to the President of the country (as is shown in the serial as well), then one can imagine the enormous stress that can be applied on honest law enforcement officials and judges.

The serial is not over, and I have not seen all the episodes. But is easy to figure out the impact of corruption in the Brazilian society, as the water utility company which comes to fix a broken pipe in the serial demonstrates the corrosive influence of systemic corruption by passing off the work to a small time contractor who will then feed back the bribe to the company officials.

I have not seen serials on corruption – this is probably the first one. The creator of the series has done an amazing job (his name is Jose Padilha), and the key actors have performed exceedingly well, though personal animosities do take an overarching role disturbing the main theme of the serial. But let me forgive that distraction and focus on the positives of the serial!

Cheers,

Vijay Srinivasan

08 April 2018

 

Falling Markets

We saw that the major equity markets around the world suffered steep losses during the week which just ended.

There are always multiple reasons why the equity investors fret at times and start a major selling operation of their holdings. Mostly it is sentiment, sometimes emotions, but almost always there is a reason or many reasons why the market sell-off happens.

In the current scenario, the negative sentiment is driven by multiple factors afflicting the U.S. economy, aggravated by bad government policies which appear to keep shifting all the time under the wise administration of President Trump. To start with, there has been a series of exits of experienced people from the administration – the latest being General McMaster who was the National Seecurity Advisor to the President. He has been replaced by the rather hawkish hothead – John Bolton, who is likely to plunge the U.S. into another back-breaking war, either with Iran or North Korea.

So, you have a combination of the following factors:

• a huge deficit budget of USD 1.3T which has just been signed off by the President, necessary to keep the government running till end of September 2018, which has a massive allocation for the military (not all of that is necessary);
• a possible credit squeeze, with the Federal Reserve planning to raise the interest rates at least twice if not more times during this calendar year;
• a high dependency on China which buys most of the U.S. Treasury Bills;
• a looming trade war primarily with China, with the President planning to impose tariffs worth USD 50/60B on imports from China, and the already planned retaliation by China;
• a strong noose tightening around the President’s neck – the Russia investigation of Special Counsel Robert Mueller – Trump cannot fire Mueller as that would lead to unforeseen consequences, but he might still do it, plunging the U.S. into uncertainty;
• more potential exits from the Trump administration – Jeff Sessions is one clear possibility;
• sex scandals threatening Trump from a series of women – the courts are admitting the cases against the wishes of Trump and his lawyers;
• the clear possibility that Kim Jong Un might refuse to enter into talks with the U.S. if John Bolton is involved; North Korea termed Bolton as a “scum” and a “blood sucker” in 2003/04 and is unlikely to talk to him if Trump deputes him or brings him along to threaten Kim Jong Un, which will very likely happen;
• the Iran nuclear deal imbroglio; Trump might refuse to certify the continuance of the deal when it comes for his quarterly certification signature as required by the U.S. Congress, in which case Iran will be free to walk away from the deal, and that might lead to Bolton arguing his case to bomb all of Iran’s nuclear facilities;
• the continuing loss of elections to the Democratic Party as just happened in Pennsylvania – the potential loss of both the House and the Senate majority, which is not likely, but appears possible now;
• and, so on and so forth…………there are many such factors

So, the equity markets falling was expected by all and sundry. If I recollect, the U.S. market ran up by more than 6,500 points (DOW) in about 14 months from the time Trump took office, allowing him to tout the market gain as one of his signature achievements. Now out of this increase, 3,000 points are gone, and it is likely that the sell off will continue into next week.

A government that is so critical for world peace and stability cannot be tottering every day. One has to just see CNN News and the U.S. Talk Shows by major news organizations, to get the full import of what is going on in Washington D.C. The Trump administration has become a laughing stock, even within the U.S.

The only silver lining is that Trump is the first U.S. President who has succeeded in pushing North Korea to the negotiating table (mostly by harsh tweets from Trump!), though both Koreas claim that they decided to play the Olympic game together and cool off the rhetoric. The other achievement of Trump is that he is the first U.S. President to stand up to China without any fear of repercussions and challenge them to a trade war.

While these are great to see and hear about, we have to recognize that Trump has still not won any battle with either one of these countries. He could not even win the Border Wall case against Mexico, which refused to foot the bill. It is going to be very tough for the U.S. to negotiate when Trump has surrounded himself with foreign policy and military hawks such as Mike Pompeo (the new Secretary of State, yet to be confirmed by the Congress), John Bolton (the new National Security Advisor who does not need Congress confirmation), Gina Haspel (the new CIA Director nominee who needs to be confirmed by the Congress), and the perennial lady hawk Nikki Haley who is the U.S. Ambassador to the U.N. A war is surely looming with such hot heads around the President, who himself is a strong hot head who will not take a slight from anyone, or advice from anyone. All the major departures have happened apparently due to the fact that the concerned person begged to differ from the views of the President.

So, here we are, with markets having fallen all around the world, including India’s SENSEX. We are entering an uncertain phase in world history and diplomatic relationships. Everything can come off unhinged. No relationship is going to remain sacred. Continuous drama at the White House is going to rock the markets on a daily basis. The markets can no longer afford to do their own business disconnected from political and economic realities.

So, we are all in for a rocky ride, folks.

Enjoy the ride however.

Cheers,

Vijay Srinivasan

24th March 2018

The most expensive city

According to the Economist Intelligence Unit’s (EIU) Worldwide Cost of Living Survey 2018, Singapore has been ranked as #1 most expensive city in the world. If New York’s cost of living index is taken as 100, Singapore works out to be 116, topping the list. Paris and Zurich are at 112, and Hong Kong is at 111. Seoul is at 106 and Sydney at 102, amongst Asian cities.

According to the EIU Survey, a bottle of wine (my favourite topic!) costs USD 23.68 on an average in Singapore, while it costs only USD 11.90 in Paris, the second most expensive city in the world. There are many things which are more expensive in Singapore than in other countries, like clothes and cars. Certain things are fine to be more expensive, as land-strapped Singapore needs to control the population of cars and road usage aggressively. Clothes can surely be cheaper – it makes no sense to buy branded clothes in Singapore when the same brand costs less than half in the U.S. for instance. But then not everyone travels, so locals look for heavy discounts and bargains; sometimes the same brand is made available at half the big store prices, via a third party in an industrial estate outlet (akin to the outlet malls in the U.S., but the ones in Singapore are just single makeshift places in a very cheap location and exist only for a couple of weekends). Since Singapore needs to import almost everything, prices tend to be higher, but the extent of price increase in the hands of the consumers is sometimes not acceptable, but we have to carry on with our lives in any case and need to buy at least the essentials.

The tag of the “most expensive city” in the world is unpalatable to most locals, as that designation just tends to increase the costs further. Expats who come to work in Singapore get increasingly higher salaries based on the EIU’s Cost of Living Index for Singapore (it is a popular survey), and that action increases the cost of living further, as the expats are just willing to pay more for everything. This in turn, increases the cost for everyone living in Singapore.

The demand for quality accommodation has pushed up market prices of housing in Singapore over the past year or so. All in all, Singapore is surely an expensive place to live, but is also probably as safe as Tokyo, which is widely regarded as the safest city in all of Asia. Rule of law and enforcement of law dominate the city state, keeping most people honest, whether they are locals or foreigners.

Coming back to the issue of cost of living, I “feel” that Tokyo is much more expensive, especially when I am having lunch or drinking coffee. I get the same feeling in Hong Kong. Clothes seem to be expensive everywhere, except in Vietnam and India. So, the major aspects afflicting Singapore with regard to cost of living pertain to things on which nothing much can be done – personal transportation when it involves owning a car, and accommodation. Wines and cigarettes will continue to be expensive, so the only way is to curb their usage. I believe hawker centre food from ‘A’ category outlets still remain affordable in Singapore – it has gone up over the past decade, but still manageable. A good quality plate of Chicken Rice can be had for around S$ 5.50 and a Bento Box of Teriyaki Chicken can be had for S$ 7.00 in most hawker centres. I am afraid when these prices will double making them unaffordable for most people. Foreigners tend to spend more than S$ 10.00 to 15.00 for daily lunches, but locals are sensitive to the S$ 5.00 mark. I see this everyday. It is sometimes funny to notice that the locals would not mind spending S$ 2.00 or more for a bus ride to their favourite hawker centre, as food plays a central role for them (like it is for most of us). I consider myself as a “local” for all practical purposes, so I tend to adopt similar benchmarks as these help when you are with Singaporeans going for a lunch session.

Cars are expensive, and enough has been written about cars in Singapore, so I am not spending any more time on this topic. I see some people shifting to App-based taxi usage away from their personal cars and other modes of transportation, and this is increasing the traffic density in an already crowded city. However, traffic flows along almost smoothly due to a very effective implementation of traffic rules. These are getting affected a bit by the big number of cycle riders who are using the same road space in a city where the average car speeds are in excess of 60 KMPH. Then there are also these personal mobility devices – like e-scooters, and you have the most infamous bike riders who twist their way between two high-speed car lanes at tremendous speeds, which will not be an acceptable way to drive in most developed countries.

Cost of credit is cheaper in Singapore than in most other developed nations, so that could be a positive. Food, as I stated above, for common daily lunches/dinners are not that expensive, but beer and wine are very expensive. Electronics items are reasonably priced, though not as cheap as in Hong Kong.

Hopefully, Paris will overtake Singapore in the next EIU Survey – most people recall the #1, but not the #2 and #3 ranks, so it is better for Singapore to slip to #2 or #3 rank soon.

Cheers,

Vijay Srinivasan

18th March 2018

 

The Culture of Materialism

The premise of this post has been to establish the link between materialistic greed of (certain) people and corruption and overall destruction of value for citizens who lead normal lives. I went for an event today, and this topic was discussed among a set of trusted friends who had very different views. As an author, I am supposed to state my views in a non-diluted manner, while accepting criticism or praise in equal measure, which is exactly what I am going to do now – I have not changed any of my views in this final version which is getting published this evening (Saturday evening in Singapore), though I did think about some of the alternate views expressed by friends today on this topic.

Here is my view in a few bullets (this is not the normal way I write, but I thought it would be good to highlight):

• Countries which unabashedly focused on the material well-being of their citizens in the 1970s and 80s, paved the way for economic growth to be the dominant factor in their countries’ vision – examples would be South Korea, Taiwan, Hong Kong, and Singapore – the four “Tiger Economies” of Asia. This meant that citizens were led to believe on the economic vision of their leaders, in turn, leading to rapid growth over the past 3 to 4 decades, rapidly enhancing the GDP per capita of these nations, and focusing on generating material wealth for the citizens. This has already happened – Singapore now is the 4th richest country in the world in just one generation! There are pros and cons, but one cannot argue with the fact that economic progress has been clearly accomplished.
• Countries which focused on political philosophies and social development in an Utopian manner did not progress fast due to the debilitating bureaucracies that these countries established, leading to slow progress and corruption as the main driver for faster movement of business. There are many examples of such nations, mostly democracies and some dictatorships, but I am not going to name them. Established mechanisms of corruption and nepotism led to stealing of wealth from ordinary citizens to line the pockets of politicians and bureaucrats, and the wealth generation was isolated in few family run businesses. Not surprising, however.
• Over the past decade or so, these large countries have seen what the smaller countries have accomplished, and are trying to adopt some of the policies though in a much belated and haphazard manner. However, the institutionalized corruption continues irrespective of change in governments as the essence of bureaucracy has stayed the same. This implied focus on materialistic economic growth will take a very long time to trickle down to ordinary citizens, and will again benefit few individuals and families, as we are seeing. Tax payers’ money is being stolen brazenly to benefit these folks.
• So, the derivation is that the focus on materialistic wealth generation is not going to work for larger countries since institutional changes and policy frameworks have not changed for the better. This would mean that corruption would accelerate and lead to larger financial scandals, while ordinary citizens would see probably a lower impact of routine corruption due to e-governance initiatives (the only major benefit, yet to be realized however).

In a nutshell, the culture of materialism will lead to skewed economic growth for larger countries, benefiting the same businessmen who benefited in the past. Lifting millions of people out of poverty towards a USD 5,000 income per capita is not a simple challenge – it cannot be compared with the easier task that the Tiger economies had with their singular focus on trade. So, there is going to be very hard time befalling on millions of honest working folks and farmers, who would be held subservient to the governments by paying more taxes and more fees to obtain banking, insurance, and other services.

This is indeed a sad situation. Expecting millions of ordinary folks to understand economic and digital principles is foolhardy, as the base of education and healthcare has not been laid out over the past many decades. When ordinary people see how the rich people fleece money in an illegal manner from the same banks and governmental institutions, what ideas would they get? When these powerfully connected and rich people escape without so much as an indictment, what message does that send to others? While a French revolution is not in the offing, ordinary people would have to take some kind of action within their control, right?

Fascinating, but also saddening. Think about the whole complex situation developing, and you will see that WhatsApp messages and Fake News do not tell the entire story. The deeply maligned people are going to scot free, and no one can do anything. This is the result of all our democracies and institutions in action. Even the U.S. is not spared, as you see in daily news, day in and day out.

The culture of materialism is destructive. It will lead to serious social divisions in society which cannot be fixed in one generation.

Think, probably with a drink like what I am doing now!

Cheers,

Vijay Srinivasan

17th February 2018